Member Info for spike501

Scotpak - broker notes are effectively paid for advertisements and have very little value. They also tell you nothing about the financial condition of company now. Only a relatively small number of AIM stocks successfully go from pure explorer to producer because of the costs involved for development - even those that do very few actually make money for those that were holding through the exploration phase due to the dilution that takes place to fund.

I can't see any reason to hold this at the moment - its just likely to drift further down, there are much better places to put your money (like under the bed).

Yes Selene is a much easier development, no doubt.

None of which addresses the issue that Deltic have barely any cash left and so cannot fund the next stages of development.

Getafgrip - sure, call Selene a joint venture if you want, but there is no joint venture of any substance that can collectively act and raise finance. To you second paragraph, there is no new entity formed here. It's simply three separate companies having a stake in a licence, each responsible for their own share of costs.

Thanks Exploration - as Selene is part of the transaction between Viaro and Shell which will complete only next year I don't see much happening before that is concluded. Given softness of oil prices, most players are now in cash conservation mode so I'm doubtful anyone is paying any cash now for a non-producing asset in the North Sea.

Probably the only hope here would be another North Sea operator buying Deltic outright for the stake in Selene and the tax losses, if they can be utilised.

Olearney - again, there is no JV. Deltic had carry on the last well that has now finished and going forward Deltic are responsible for their share of any costs. If they cannot meet their share they would have to relinquish as they did at Penascola - granted that isn't an immediate concern.

Worth noting of course that Selene is being sold by Shell to Viaro effective in 2025 so unlikely to be any news until then about next steps as Shell hand over the operatorship.

More pressing is Deltic's current cash position and stated strategy of looking outside of the UK which means they will almost certainly be raising in the short to medium term.

"I would assume the JV will raise project finance, but depends on what is in the JV agreement, I guess!"

Why does everyone talk about a JV? There is no JV, its simply a licence which is split between 3 parties, each responsible for their share of costs. There is no JV that collectively raises the funds.

"Same for Shell and Dana, they are not going to put all cash in for the infrastructure."

Of course they are, all parties are responsible for their own cost share - both Shell and Dana have substantial cash and access to credit so financing this is no problem for them.

The carry only applied for the current well, its stated in the text - "the Selene well"

There is no carry after this well, if Deltic cannot meet their share of costs for future work programs then as per Pensacola they would have to relinquish.

"Selene is a completely different situation as two farm-outs were completed (1 to Shell, 1 to Dana petroleum). Thus Deltic is fully carried in cost terms. It does not need to seek out funding for the upcoming production as Shell and Dana will fund it all."

This is incorrect - Deltic were only carried for the well just drilled which will now be plugged and abandoned. They have no further carry so need to fund their 25% share for any further development work.

"Because contractually Deltic own a 25% share in Selene. If they want a quarter of the Cashflows associated with the discovered gas they are working on, they would need to pay up. Deltic going bust and having a zero mkt value is irrelevant."

Did Pensacola completely pass you by? Its only worth what someone is prepared to pay for it and everyone can see that Deltic are financially very weak. Dana and/or Shell can afford to wait and see what plays out with Deltic - in the context of both, Deltic's share is peanuts for them, they've no need to toss any cash around now.

“Suggest doing the research on how much 131 bcf proven is worth”

How are you factoring the impact of the upfront costs Deltic need to fund before first cashflows?

Deltic have 25% of that 131bcf.

“Yes the way this has traded with an immediate wash out of the day traders it will likely make its 'real' move later in the day.“

Agreed - further down as the market continues to digest the news that Deltic has just 5m BOE equivalent that best case gets first cash flow in 2028 and may not get developed and now Deltic need to raise cash for their ‘new’ strategy.

You don’t think a reduction of 170bcf will reduce the financials because the reservoir is slightly better??

Stop lying Gordon - the reservoir quality was better than expected but the reservoir is substantially smaller than expected had recoverable P50 is substantially reduced

Estimate volume has been cut by about 60% from pre drill estimates- it’s now pretty marginal for development and worth far less.

I’ve set to sell at the bell - this is set for sub 5p again over next days and weeks, limited assets and not much on the horizon.

"Shorting is illegal in Germany and a few other European and the USA. Personally I would ban it here as good companies can be taken down by the system. "

Shorting is not illegal in Germany and the USA - where do you get this idea from?

"Do you have shares here spike or are you just short or even just beating yourself up over money lost here?"

I have a small holding here - not big enough to worry about losing the entire lot, but I think there is a reasonable change of a spike to mid-teens, maybe 20 on what I expect to be Selene success.

Any success increase will almost certainly be temporary though - Deltic will use any chance they get to get a placing away and then its likely to enter a long news vacuum so no catalysts for SP. Shell and Dana can afford to take their time, if they are interested in Deltic stake, make Deltic sweat a bit.

What's you story? You appeared out of nowhere on a spike and didn't even know basic information like the targeted first gas date for Deltic's only major asset.

“Forgot to mention, what about our tax losses? To me it seems silly Dana or shell/viaro purchasing the rest of Selene. “

True that would make sense and that’s where Deltic could have some leverage as there is around 54mil in tax losses.

For Dana and Shell it’s effectively free this year due to the investment allowances against tax. They can offset costs against taxes.

"Well said Island girl. They’ve literally told us this"

They literally told you a lot of stuff on Penascola as well - how did that all pan out? It's a buyers market, Deltic have zero leverage.

As I said yesterday I don't believe there will be any serious cash buyers for Selene - players are existing the North Sea, not entering and no one is going to stump cash now for cashflow in best case 4 years which is totally dependent on Shell directing resources and the Government sanctioning - its to much of a risk. Farm down to Dana and/or Shell for free carry to production is more realistic - that sort of deal could come with some single digit million cost recovery.